Health Insurance: A Better Prescription

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When Senate Majority Leader Thomas Daschle shelved the $110 billion
stimulus package Congress was considering last month, he did more
than miss an opportunity to give the economy a boost. He passed up
a chance to help the millions of Americans who lack health
insurance.

That's because the legislation contained a provision, carefully
hammered out by the president and a bipartisan coalition of
congressional "centrists," to help the unemployed and uninsured.
The provision called for $13 billion worth of tax credits and
premium subsidies for private health insurance for the unemployed.
To get them help quickly, the assistance would be delivered through
state unemployment compensation offices. Families would have been
eligible for a credit that amounted to 60 percent of their
health-insurance costs-up to nearly $300 per month for a period of
two years.

But because he strongly opposes this common-sense reform, Sen.
Daschle refused to let the bill come up for a vote. He wanted the
additional assistance to go only to the small percentage of the
unemployed who still could take advantage of their former
employers' health plan. All other displaced workers would be
enrolled in Medicaid, a welfare program.

Never mind Medicaid's reputation for substandard care, its
relatively poor access to doctors and specialists, and its mounting
financial problems. Sen. Daschle wants no part of any health-care
proposal that introduces patient choice or private-sector
competition into the health-care system. Inexplicably, he wants
displaced workers to remain dependent on either their former
employers or welfare bureaucrats for their health-care
coverage.

This insistence on the status quo reflects a broader problem
with the current health-care system. By current law and regulation,
employees' health-care coverage is tied to the job. How? Employees
and employers get unlimited tax relief for the purchase of health
insurance-but only as long as workers buy into the plans their
employers provide.

Not surprisingly, those who work for large corporations usually
get the best coverage. Those who work for small businesses often
get no coverage at all. If they want to buy it, they can, but with
no tax breaks to offset the cost. The unemployed, of course, have
no coverage and get no tax relief or even limited federal
assistance to get the coverage they want or need.

There's another hitch. Patients often have little or no choice.
They basically must take what their employers offer. Many workers
are forced into HMOs. Large employers often offer more than one
option. Small employers often don't. If a plan doesn't fit the
workers' needs … well, tough. They can go out and buy their
own plan without any tax relief, or just make do.

For the unemployed, the situation is desperate. Not only do they
lose both their coverage and their tax break, but they're forced to
shell out for premiums that will climb an average of 13 percent or
more this year. And even if they could afford it, the plans don't
always meet the needs of a working family; they often include
coverage of unnecessary items that drive up costs merely meet the
requirements of state law. Nationwide, more than 1,400 state
mandates govern the type of medical treatments and services health
insurers must cover.

These mandates force customers to subsidize treatments and
procedures that many neither need nor want, such as acupuncture,
chiropractors, contraceptives, dietetic services, drug-abuse
treatment, in vitro fertilization, infertility treatments, marriage
therapists, social workers, professional counselors and
psychologists. Maryland has 50 such mandates; California has
42.

And more are on the way. A study by the Health Insurance
Association of America shows that as many as one in four uninsured
Americans lacks health coverage precisely because of the climbing
costs of such mandates.

Unless we're prepared to let the number of uninsured Americans
rise still further, this situation can't continue unchecked.
Congress should make assistance for the unemployed its first
priority of the new year. It should extend generous individual tax
relief-or premium subsidies for those who don't have the money-to
families so they can buy the health coverage of their choice. And
state lawmakers can help by repealing the often silly mandates that
price health-care coverage out of reach for so many families.

We've seen too many people lose their jobs-and their health
insurance as a result-since Sept. 11. Times are tough enough
without Washington making them tougher. The House of
Representatives has already passed relief. A question for the
Senate: Why not give laid-off workers and their families a
break?

Robert
Moffit is director of domestic policy studies for The
Heritage Foundation, a Washington-based public policy research
institute.